Was a little disappointed to hear Gonzalo insist, about half way through, that it IS hyper-inflation, rather than give more of a reasoned approach on how it might be hyper-inflation.
G outright states that 10% odd inflation in CPI would be hyper-inflation, the early stage.... even as asset prices declined. Of course there are alternative theories out there that can give an explanation for this. Taking an international approach; nationally, local assets can depreciate against the local currency, AND globally, the local currency itself can depreciate against other currencies.. this would lead to price distortions and upwards pressure on such things as imported commodities and consumables.... ergo up to 10& inflation in CPI, but how can hyper-inflation be deduced from this?There was no real comparison and parallels drawn between what happened in Chile and what is happening in UK/ US etc.
Run on the US bond market? So the panic out of treasuries involves all the banks and fat cats running to buy up all the baked beans etc in town?
The elephant in the room is Japan, and any comparison with its bond market always seems to get ignored by hyper-inflationists.
The idea of haircuts is worth further exploring [G doesn't seem to want to see that a populist political movement in the US is leading to austerity not continued stimulus.... with a massive influence on both main parties, especially the Republicans]. Haircuts at the national level. And at the international level
. imo this haircut will involve a structural change in currency/ trade, which could require the dollar being linked to gold, in order for surplus currencies to appreciate. this would lead to say a 30% haircut on the real value of their foreign reserves.... but also rebalance trade which is very much in everyone's interest.
It was interesting that G thought that further stimulus/ printing was not required, and the existing stock of money was sufficient to cause hyper-inflation. I find this a bit incredible though given that we are in a debt deflation, which is looking to gooble up as much money as it can.
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.
Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].